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Are Women Entrepreneurs Catching Up? It's Complicated.

June 21, 2018

Aspiring business owners face an unfriendly forecast: around 20% of small businesses fail in their first year and 50% don’t survive past five years. And for women entrepreneurs, gender barriers can interfere with these already dicey prospects. The Senate Committee on Small Business & Entrepreneurship lists a handful of the disproportionate challenges women continue to face: difficulty breaking into male-dominated networks, accessing mentors, securing adequate funding and more.

But alongside their plight, women are creating encouraging momentum. In the past 20 years, the growth rate for women-owned businesses has dwarfed the national average—increasing by a staggering 141% compared to 44% for all businesses. Determining how these companies perform compared to those run by men is a nuanced undertaking, but recent research suggests women entrepreneurs are just as successful as their male counterparts.

The nonprofit mentorship organization SCORE captured data on small business performance, financing and mentorship by surveying over 20,000 of its clients—male and female founders who’ve received mentorship services (SCORE acknowledges that examining only mentored businesses makes for less generalizable results). The findings are heartening: women report roughly the same entrepreneurial success, expected revenue growth and business longevity as men, all while operating on an unequal playing field.

“Women entrepreneurs are succeeding despite many obstacles and odds that are stacked against them,” says Betsy Dougert, SCORE’s director of communications.

Shouldn’t this be too obvious to write about? Who underestimates women entrepreneurs in the first place? And if they’re pacing with men, doesn’t that mean we’ve already made a heap of progress and can relax for a second?

While the progress is promising, it’s still incremental. We’re operating in a space where women are egregiously underrepresented. Studies emphasize that society views business ownership as a primarily male endeavor, inevitably amplifying women’s challenges and quieting their achievements.

Even with women founding companies at a faster pace than the national average, we’re only chipping away at the gaps. Women are still half as likelyto start businesses. Their companies account for approximately 4% of total business revenue. And when it comes to accessing capital—the lifeline for fledgling companies—women are at a big disadvantage. Whether they’re looking to secure a traditional bank loan or raise venture capital, they’re considerably less likely to get the money they need.

Add those business barriers to the mix of more universal setbacks—the wage gap, disproportionate caregiving rates, stereotypes about women’s interests and innate strengths—and it’s tough to imagine how a women-led company wouldn’t struggle.

“It also makes us wonder if some women, knowing how low their odds are, are giving up on even trying to seek financing for their businesses,” says Dougert. She adds that we might even be underestimating their potential based on a “commonly-held misconception that women are running these businesses as side hustles or hobbies.”

For Ethan Mollick, an associate professor at Wharton business school who studies gender and entrepreneurship, SCORE’s results aren’t exactly revelatory—but they’re still important. He recognizes that the “representation gap” may make it harder for society to notice and embrace women as skilled enterprisers. “If you can get past these barriers,” he says, “Women are really good at running businesses.”

The solution? Spotlighting women catching up or outperforming men despite these disparities is a start, notes Mollick. But developing an assessment that can quantify and compare the performance of men versus women entrepreneurs remains a lofty work in progress.

With a dizzying variety of factors at play, defining “success” and establishing equivalency among businesses and their founders are highly complicated projects. Women typically start different kinds of companies and wind up in different industries than men do, Mollick points out. Their companies are often smaller in both size and earnings. And they’re likely flying solo: it’s estimated that nearly 90% of women-led businesses employ no staff beyond the owner.

Given these distinctions, can we even hold men and women to the same standard of entrepreneurial success, particularly when the starting line favors one over the other? How do we ensure comparisons account for the countless variances across industries, business lifecycles, demographics and so on?

“It’s a major research push. There have been some massive, multimillion-dollar efforts to try and collect data on the long term,” says Mollick. “We have a lot of evidence piled up about this stuff and what we're trying to do is carefully pick apart the pieces.”

Unraveling the data might still be a puzzle. But a first step is recognizing that while the gender disparities in their way are substantial, women can still gain ground and launch thriving businesses—which, Mollick says, likely “involves harder work.” In the meantime, SCORE’s results are an uplifting reminder that there’s movement forward, however gradual, in creating a more accessible and welcoming space for women entrepreneurs.